Merger approval in limbo at FCC

The $80 billion dollar merger of AT&T and BellSouth, which sailed through the approval process at the state level and the Department of Justice, has temporarily run aground at the Federal Communications Commission.

The FCC once again delayed its vote on the merger, scheduled for today, and published reports say FCC Chairman Kevin Martin has been unable to broker a deal with the two Democratic commissioners, Jonathan Adelstein and Michael Copps, on the conditions they would accept in exchange for approving the merger.

The delay is giving new hope to merger opponents, who want to see, at minimum, more conditions put on the deal in the form of competitive protection than AT&T has proposed. Competitive service providers are concerned that as power in consolidated in the hands of fewer incumbents, their access to last mile loops will be squeezed.

“COMPTEL applauds the FCC for choosing not to consider the proposed merger of AT&T and BellSouth at its Nov. 3 open meeting,” said Earl Comstock, president and CEO of Comptel, the lobbying organization for competitive service providers. “Given AT&T’s failure thus far to make a good faith effort to address legitimate public interest concerns, COMPTEL is heartened that the Commission did not bend to AT&T's pressure tactics. It remains to be seen whether AT&T ever engaged in any meaningful attempt to resolve those concerns but we look forward to seeing what, if any, last-minute proposals they may have made to the Commission.”

If the FCC can’t reach a decision, Comstock added, it must put the issue before an administrative law judge “for hearing and recommendation on whether the merger promotes the public interest.”

Republican Martin is a bit hamstrung in his effort to create a majority because one of the three Republicans on the FCC, Robert McDowell, formerly work for Compel and is expected to recuse himself from the vote. That forces Martin to persuade one or both of the Democrats in order to get approval.

AT&T has been working hard to win those votes as well, presenting a letter from 17 Democratic members of Congress from the nine BellSouth states, all supporting merger and urging its approval.

In a formal statement Thursday, AT&T officials expressed some frustration that the conditions it has offered weren’t enough, but maintained certainty that the merger would be approved.

“In order to obtain expeditious FCC approval, we have put on the table a number of proposals that directly benefit consumers – such as a $10 per month broadband offering and broadband connectivity to rural and low-income areas,” the official AT&T statement read. “These unprecedented conditions unrivaled by any other communications provider in a merger proceeding have been fully examined in an open, public debate, and have received glowing approval from a broad range of individuals and groups. While we have been engaged in this process for many weeks, regrettably we have not seen much progress towards resolution. We remain confident that ultimately the merger will be approved, so that we can begin providing the overwhelming benefits the merger represents to consumers, to the economy and to the public interest.”

The FCC has no further scheduled meetings this year and didn’t indicate in announcing removal of the merger vote from its Nov. 3 agenda when the matter would next be discussed.